No CODI Hardship Exemption.

The petitioner was 76 and dying of cancer.  For his business, he had taken out a $50,000 line of credit with his bank in 2008.  He couldn't pay off the credit line and the bank agreed to accept $15,628 as full payment on the loan in 2009.  The petitioner also couldn't pay other debts totaling over $68,000 and that amount was also canceled in 2009.  The petitioner received Form 1099-C from the bank with box 5 checked, indicating that that the petitioner was not liable for repaying the debt balance.  However, the petitioner did not report his canceled debt in income on the 2009 return.  He attached a statement to the return that the local IRS office had told him that "it would likely come under the hardship rules for approval."  While the petitioner believed that he was not liable for reporting the cancellation of debt income (CODI), the IRS and the court disagreed.  The court noted that there is no exception under I.R.C. Sec. 108 for "hardship."  In addition, the court noted that administrative guidance from the IRS is not binding on the court and it cannot change the plain meaning of tax statutes.  While the court agreed that the petitioner had suffered from hardships, such hardships did not absolve him from reporting the CODI.  The petitioner was neither insolvent or in bankruptcy.  Dunnigan v. Comr., T.C. Memo. 2015-190.